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ExxonMobil wants to recover money for IT gear but unable to account for spending – Auditors
FILE – The logo for ExxonMobil appears above a trading post on the floor of the New York Stock Exchange, April 23, 2018. ExxonMobil says it is boosting its spending on greenhouse gas emission-reduction projects to $15 billion over the next six years and anticipates meeting its 2025 greenhouse gas emission-reduction plans by the end of this year. (AP Photo/Richard Drew, File)
Kaieteur News – A perusal of the audits conducted by the Government of Guyana in relation to the expenses of ExxonMobil Guyana Limited (EMGL) has revealed scores of charges being claimed by the operator as recoverable, but which cannot even be accounted for.
One such instance obtained, when auditors checked into the accounts of EMGL as it relates to a claim for $1,381,000 but when asked to verify, the company could only account for US$68,000. The audit conducted by Martindale Consultants, Inc. and VHE Consulting, was commissioned by the government to review cost recovery statements submitted by Exxon Mobil Guyana Limited (EMGPL) for the period between 2018 and 2020.
According to the auditors, EMGL included on the Cost Recovery Statement allocated costs for EMIT (ExxonMobil Information Technology) and Telephone but when requested to provide invoices and journal entry detail for selected sample charges, the company only provided requested expense reports but none of the third-party or other documents were provided to support the charges. As such, the auditors concluded that the validity and propriety of the EMIT/IT costs cannot be ascertained without the supporting invoices and further documentation and explanation.
Under the Production Sharing Agreement signed between the Guyana Government and EMGL the operator is allowed to recover technology costs such as computers, software, etc., but the costs must be for Petroleum Operations and the Contractor must adequately support that the costs were billed at actual costs. With this in mind, the auditors outlined an instance where “of the $1,381,000 in requested documents, the Contractor only provided $68,000 of expense report detail.” It was noted that the remaining costs, and those not included in the sample, could not be determined to be proper and valid costs without the requested supporting documents.
“Exception is taken to the costs until the Contractor supports these costs as specific to Stabroek Petroleum Operations and were billed at actual costs by providing the requested invoices and fully supported journal vouchers” and as such, EMGL was requested to credit “the Cost Recovery Statement for these unsupported EMIT / IT costs.”
The Auditors found too that EMGL included on the Cost Recovery Statement an allocated share of ExxonMobil Information Technology and IT costs billed by EEPGL’s Affiliate ESSO Exploration Inc. This the auditors, found was charged through various Cost Object Orders and when EMGL was requested to provide invoices and journal entry detail for selected sample charges, only provided general ledger line-item detail and a broad description for what the charges included. The general ledger line-item, the auditors said detailed and broad descriptions do not provide any additional relevant information than what was initially provided.
As such, the validity and propriety costs “cannot be ascertained without the supporting invoices and further documentation and explanations.”
EMGL was further requested to clarify why expenses, such as those invoiced to Cost Object Orders, until January 2020, were entirely attributed to Stabroek, rather than being distributed among various other Cost Objects in accordance with their respective allocation criteria.
To this end, the auditors reported that the Contractor failed to “justify why these costs were exclusively designated for Stabroek operations.”
The auditors were adamant, “without question other departments supported operations other than Stabroek prior to January 2020, so those other operations should have shared in the pre-January 2020 costs unless the Operator can fully explain and support that no other operations utilised any of this equipment.” With this in mind, it was noted that exception is taken to the costs until EMGL supports that the costs are for specific Petroleum Operations, were billed at actual costs, are supported by invoices are supported journal vouchers, advises how and where the applications are used, and that 100 percent of the costs that were directly billed to Stabroek are solely for Stabroek Petroleum Operations.
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